South Korean electronics giant Samsung has downgraded its Nairobi regional office in a major operational shake-up that is likely to result in loss of jobs, joining a host of other multinationals that made similar moves.
The Seoul-based firm said the changes, which come barely two years after it sent home 26 executives from the Nairobi office, are meant to cut costs and improve efficiency across its African market.
The shake-up will see Samsung East Africa’s chief executive and chief finance officer relocate to the company’s South Africa offices, according to sources familiar with the matter.
“By centralising operations and resources, we plan to introduce greater levels of efficiency, and this strategic move will also enable us to focus more significantly on product, sales and marketing functions,” Samsung said in response to our queries.
“We’re unable to provide further details on how many jobs will be affected. Our primary objective is to prevent job losses as we strategically align the business operations.”
Samsung has a workforce of 70 at the Nairobi office, about half the 120 employees the firm had in 2015.
Coca-Cola last year downgraded its massive regional headquarters in Nairobi and relocated a significant chunk of operations to South Africa, resulting in 40 job losses.
Barclays Africa Group last year closed its regional management office in Nairobi, shifting all support role to South Africa.
Finnish phone maker Nokia in 2012 demoted the Nairobi hub from regional headquarters to a local sales office, a move that put it under South Africa. An undisclosed number of staff lost jobs.
Samsung opened the Nairobi regional hub in November 2003 targeting to grow market share in the East African market with its range of products such as TVs, cell phones, computers, and home appliances.
It also embarked on setting up service centres across Kenya and the region to provide after-sales services to customers and wade off stiff competition from Asian rivals such as LG, Huawei, Tecno, Asus, Sony, Lenovo, ZTE, Panasonic and Toshiba.
Mobile phones are Samsung’s bread and butter and have come under pressure from low-cost Chinese gadgets.
The Nairobi office downgrade now puts to doubt Samsung’s plans to set up an electronics assembly plant at the upcoming Konza techno city.
Samsung declined to comment on the impending relocation of top Nairobi executives to the Johannesburg.
“We are unable to provide further details on this. We are following a due process and we will keep you posted once it is finalised.”
A total of 26 senior and mid-level managers left Samsung in 2015, with sources attributing the exits to alleged internal fraud and accounting malpractices at the Kenyan office.
The change in Africa strategy comes as Samsung is battling strong headwinds on the global front, related to corruption, falling sales, and recall of botched products.
A court in South Korea has sentenced Samsung’s billionaire heir-apparent Lee Jae-yong to five years in prison for corruption.
Samsung’s smartphone sales declined 3.1 percentage points in the first quarter of 2017 due to stiff competition to close with a market share of 20.7 per cent, according to data from Gartner.